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Thursday, May 11, 2017

Strategic sale: Modi govt sells off Scooters India

BEGINNING the process of stategic sale of sick PSUs, the NDA government has started outright sale of some of the state-owned firms starting with Scooters India.
The strategic stake sale in Scooters India is part of the overall Rs 72,500-crore disinvestment target fixed by the finance ministry for 2017-18.
The stategic sale is likely to attract attention of major auto giants... as the Lucknow-based ailing PSU has an integrated automobile plant, engaged in designing, developing, manufacturing and marketing a broad spectrum of conventional and non-conventional fuel driven 3-wheelers.
“The government has in-principle decided to disinvest its 100 percent equity in Scooters India Ltd through strategic sale with transfer of management control,” the department of investment and public asset management (DIPAM) said in a statement.
Scooters India was formed after the government bought over Innocenti of Italy. In 1975, the company started its commercial production of scooters under the brand name of Vijai Super for domestic market and Lambretta for overseas market.
Earlier, the Centre is banking on the Lambretta brand as it mulls strategic sale of assets of the loss-making PSU, Scooters India Ltd.
In 1972, Scooters India Limited bought the entire Lambretta manufacturing and trademark rights, and produced models under the Vijay Super name and also distributed completely knocked down units which were assembled under different brand names like Allwyn Pushpak, Falcon and Kesri. SIL's production finally ceased in 1997. The disinvestment in Scooters India is part of the government's plans of strategic stake sale in loss-making central public sector enterprises. Scooters India used to manufacture the popular Lambretta scooters in the 1970s.
The disinvestment of Scooters India had cropped up in the past, but successive governments could not implement the plan, due to divergent views within the government and employees of the company. Despite revival packages including sanctioning a "financial package," Scooters India continued to incur losses and eventually was declared "sick".
After the NITI Aayog completed the process of identifying central public sector enterprises (CPSEs) for strategic disinvestment, the finance ministry has started the process of inviting bids from merchant bankers and legal advisers.
In April, the government began the disinvestment process with a 9.2 percent stake sale in NALCO for Rs 1,204-crore. The government is also selling a 10.2 percent stake in Hudco to raise upto Rs 1,225 crore.
The finance ministry has also plans to sell stakes in more than 20 PSUs, including Indian Oil Corp, National Thermal Power Corp, Rural Electrification Corp, Power Finance Corp, Neyvelli Lignite Corp and NHPC.
Apart from the seven blue-chip companies, the government also has plans for listing Rail Vikas Nigam Ltd, IRCON International Ltd, Indian Railway Finance Corporation Ltd, Indian Railway Catering and Tourism Corporation Ltd, RITES Ltd, Bharat Dynamics Ltd, Garden Reach Shipbuilders & Engineers Ltd, Mazagon Dock Shipbuilders Ltd (MDSL), North Eastern Electric Power Corp, MSTC Ltd and Mishra Dhatu Nigam Ltd.
Five state-owned insures—New India Assurance Company Ltd, United India Insurance Company Ltd, Oriental Insurance Company Ltd, National Insurance Company Ltd, and General Insurance Corporation of India—will also be listed.
The government has set a target of Rs 46,500 crore through small stake sales and Rs 15,000 crore from strategic disinvestment during 2017-18, to help bridge the fiscal deficit estimated at 3.2% of GDP during 2017-18.